There are countless ways organizations are ready to explore to avoid exposing bad news in an attempt to distract the attention of investors or the general public from weak economic results.  One such time-honored practice in this disreputable discipline has been to delay the announcement of information that is likely to disappoint markets until a Friday afternoon when even those normally conscientious and principled in scanning the business landscape for meaningful news cannot help being tempted to turn a blind eye to excess data, with the joys of the weekend mere hours away.  Unfortunately, as Leon Zolotoy of Melbourne Business School reports, the days of this avoidance strategy, quite common despite never really making it to the curricula of executive business education, may well be numbered as more and more market participants have learned to take notice. 

In fact, probably as an allergic reaction to blatant attempts to openly misdirect investors' attention and in this way paper over bad earnings, embarrassing results made public on Friday afternoons are met with greater distaste and a much more negative response.  In his research that looked at nearly 30 years of data, Professor Zolotoy observed that the stock market has recently become increasingly willing to punish businesses that move their dubious financial statements to Fridays.  However, what he dubs the Friday effect may not only be a reflection of market participants adapting to practices that border on dishonesty.  With amounts of anxiety and uncertainty historically high, investors may be viewing the last day of the working week as the final moment for decisions that can protect their portfolios and shelter them from threats that are likely to emerge over the weekend.  Essentially, the heart of the matter, which all curricula of executive business education should acknowledge, is that markets reward integrity, honesty and good practice, particularly in times of heightened concern like late Fridays.

Professor Zolotoy recommends greater transparency in announcing bad results, warning that markets have developed a mechanism of overwhelmingly negative overreaction.  As a practical move that business leaders can apply to avoid the fallout of the Friday effect, he suggests that they should make weak earnings public on other days of the week.  In fact, his research emphasizes, on the example of a single corporate malpractice, how important it is for companies to promote sincerity in their relations with outsiders and how skillfully markets adjust to punish and eliminate seemingly trivial manifestations of deeper corruption.  Zolotoy's scientific conclusions, which he commented with reservation typical of a good researcher, can easily be turned into a bigger moral lesson, worthy of including it in executive business education guidelines for true leaders who know lasting success cannot be malpractice based, no matter how trivial.